Growth, inflation and labour market all easing
With life in Australia currently very close to pre-pandemic “normal”, the boom in household goods and department stores has largely subsided.
With life in Australia currently very close to pre-pandemic “normal”, the boom in household goods (i.e. furniture, consumer electronics, building supplies) and department stores has largely subsided. Now that sectors dependent on staying home have fallen away, the key question is to what extent sectors dependent on going out, such as clothing and footwear and hospitality, will replace them. So far, these sectors have improved but it is not clear this will be sustained.
Overall, the Australian economy continues to outperform expectations, particularly with respect to employment. However, wage growth is yet to see a sustained uptick from 2020’s record lows. While we hear anecdotes of labour shortages, this is yet to show up in the data. Both our forecasts and those of Commonwealth Treasury in last week’s budget point to continued weak wage growth. Ultimately, it will be difficult to sustain conditions in the retail sector without a wages lift.
For more information, please see the NAB Cashless Retail Sales Index April 2021
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.